BERLIN, Aug. 16 (Xinhua) -- Profits at Henkel suffered from adverse currency effects and higher production costs during the second quarter (Q2) of 2018, earnings figures published on Thursday by the German consumer goods producer show.
Net profits at the Duesseldorf-based company slumped by 4.2 percent to 598 million euros (680 million U.S. dollar) in Q2. The development was mainly attributed to the recent weakness of the Turkish Lira and Mexican Peso in foreign exchange trading.
Turkey and Mexico are both important growth markets for Henkel whose global consumer goods empire ranges from household detergents to adhesives and includes popular brands such as Persil, Fa and Loctite amongst others.
Half-year revenue fell by 7.4 percent to 9.9 billion euros between January and June 2018. Once adjusted for currency effects and one-off transfers, however, Henkel's organic revenue growth during the same period came in at plus 2.3 percent.
"More than two thirds of the strains stem from growth markets", chief financial officer Carsten Knobel commented on the development. Additionally, a rise in the price of oil had led to higher material costs shouldered by Henkel between April and June.
In response to uncertainty in emerging markets and higher costs, the DAX-listed company revised its annual forecast downward on Thursday. Henkel now expects adjusted profits to grow by between three and six percent, compared to an earlier estimate of between five and eight percent.
Nevertheless, chief executive officer (CEO) Hans van Bylen emphasized that business at Henkel had still "developed positively" in Q2 as a whole in spite of challenging market circumstances. Quarterly gross revenue rose slightly to the record level of 5.1 billion euros, while organic growth was measured at strong 3.5 percent.
Van Bylen announced that Henkel would continue to raise the final prices of its goods in a bid to improve profitability. The CEO said that the company was concerned about political developments in Turkey but would remain committed to a presence in the market, one of the ten largest served by Henkel, as a long-term investor.
Founded in 1876, Henkel recorded over 20 billion euros gross revenue in the past fiscal year of 2017. The company employs around 53,000 workers across the world.
